An agreement of sale, coupled with possession of the property, creates an interest in the property sufficient to allow the purchaser to be impleaded as a party to a suit relating to the property. A compromise petition that is intended to injure the rights of a third party is unlawful and void under Section 23 of the Contract Act.

( 1 ) BY order dated 21/08/1958. I called for a report from the District Munsif, Narasaraopet, on the following two questions:-- 1. Whether the agreement of sale was executed by the 1st respondent in the application (C. M. P. No. 4747 of 1956) and whether the petitioner was put in possession of the properties; and

( 2 ) WHETHER the compromise dated 30-7-56 entered into between the parties in the second appeal was a collusive and fraudulent one. The learned District Munsif by his order dated 14/12/1956, held that the agreement of sale was executed by the first respondent in favour of the petitioner. In paragraph 10 he found that the petitioner was in possession of the suit properties in pursuance of the agreement of sale. He further held in paragraph 11 that the compromise entered into between the respondents Nos. 1 and 3 was a collusive and fraudulent one. 2. The finding on point No. 1 is not attacked before me. So far as point No. 2 is concerned, Sri Konda Kotayya, the learned advocate for the third respondent contended that the conclusion drawn by the District Munsif was wrong. Having carefully gone through the report I have no doubt that the conclusion arrived at by the District Munsif on point No. 2 is right. The first respondent succeeded in both the Courts. He was also entitled to recover mesne profits from the third respondent and in the circumstances there was no need for the first respondent to enter into compromise but for cheating the rights of the petitioner. The next question is whether the third respondent did not have a similar fraudulent intention to affect the rights of the petitioner. The facts discussed in the report clearly lead to the conclusion that the third respondent was also a partly to the fraud. I, therefore, confirm the finding of the District Munsif on this question.

( 3 ) SRI Konda Kotayya, the learned advocate for the petitioner strenuously contended that the provisions of Order 1 Rule 10 and Order 22 Rule 10 did not apply to the facts of this case, and that the petitioner ought not to be impleaded as a party to the second appeal for the purpose of opposing the compromise petition. Order 23 Rule 3 enacts that where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, the court shall order such agreement or compromise to be recorded and shall pass a decree in accordance therewith so far as it relates to the suit. The first question to be, determined is whether by reason of the filing of the compromise petition on 30th June, the second appeal should be regarded as having come to an end, and no application under Order I Rule 10 and Order 22 Rule 10 should be entertained. In Lakshsn Chunder Dey v. Sin. Nikunjamoni Dassi, 27 Cal WN 755; (AIR 1924 Cal 188), a Bench of the Calcutta High Court held that as the decree has not been drawn up in terms of the compromise the suit should be regarded as pending at the time of the application. A contrary view has been taken by a single Judge of the Madras High Court in Muthuramalinga Sethupathi v. Secretary of State, 50 Mad LJ 59: (AIR 1926 Mad 341 ). Kumaraswamy Sastry, J. , states at p. 61 (of Mad LJ): (at pp. 341-342 of AIR) that as the compromise between the Union Board and the plaintiff was a lawful and valid one, the District Munsif had no power to add any party but he had only power to pass a decree in terms of the compromise. This decision is referred to with approval in Narayana Swamy Naidu v. N. Subbaramulu Naidu, 68 Mad LJ 236: (AIR 1935 Mad 394), by Pakenham Walsh, J. In both the cases no reference is made to the decision of the Calcutta High Court. In Seethai Achi v. Meyappa Chettiar, 66 Mad LJ 517: (AIR 1934 Mad 337), a Bench of the Madras High Court preferred the view of the Calcutta High Court to the decision in 50 Mad LJ 59: (AIR 1926 Mad 341 ). The same point arose for decision once again in Nanjammal v. Eswaramurthi Goundar, 1954-1 Mad LJ 530: (AIR